Small businesses and consumers are calling for an investigation into the energy market, claiming it is ‘broken and urgently needs fixing’.

Consumer group Which? and the Federation of Small Business have united to draft a joint letter to the Office of Fair Trading, Ofgem and the Competition and Markets Authority, saying that competition needs to be increased.

Nine in ten consumers believe the energy market should be referred for further investigation, the groups said, while seven in ten are worried about energy prices. Just one in five trust energy companies, they said.

Probe? There is speculation a report into the energy market could trigger a full competition inquiry

The Big Six gas and electricity suppliers are expected to hear soon, possibly later this week, whether there is to be a full competition inquiry into the energy industry.

The financial, energy and consumer regulators have been reviewing the working of the market for the past three months, and are expected to publish a final report within days.

There is speculation the report could trigger a full competition inquiry.

Which? and the FSB said in their letter that ever rising energy bills were a ‘major concern’ for small businesses.

‘It is clear that the energy market is broken and urgently needs fixing. Top of our concerns is the need to increase competition and to make trading transparent.

‘For too long the lack of competition in the energy market has not been addressed. It is now time for radical changes that deliver an effective, competitive market that works for everyone, before the scale of this crisis worsens.

‘We all want to see a transparent market where consumers and businesses alike can understand their bills, compare prices and switch easily.

‘We want to see the presence of strong competition right across the industry drive affordable pricing that gives everyone the confidence they are paying a fair price for their energy,’ said the letter.

A spokesman for Energy UK said the energy industry supports competition.

‘The increasing number of companies looking to supply energy, allied to the numbers of customers switching and choosing smaller suppliers, shows that the market is active and working in the interests of customers.’

‘Consumers need to be confident that the energy market works for them and the prices they pay are fair. Anything which can help shine a light on the workings of the energy market is welcome.

‘But consumers will be rightly disappointed if the Government uses this review as an excuse to kick the problem of rip-off energy bills into the long grass. We have hardly been short of reviews of the energy market in recent years - but what has been missing is decisive action to protect consumers.

Strain: Rising energy bills mean over three years costs have risen by nearly 40 per cent to an annual average of more than £1,300

‘The next Labour government will undertake the biggest overhaul of our energy market since privatisation.

‘Our plans will break up the big energy companies, put an end to their secret deals and make tariffs simpler and fairer. And until these reforms kick in, we will put a stop to unfair price rises by freezing energy bills until 2017, saving the average household £120.’

But sources said at the weekend that in the event of a competition review, Labour would find it all but impossible to impose a price freeze without waiting for the results, if it came to power.

Energy bills have risen by nearly 40 per cent in the past three years to an annual average of more than £1,300.

The Government has been under intense pressure to help consumers hit by soaring bills following Miliband’s pledge.

James Padmore, Head of Energy, comparethemarket.com, said: 'Which?'s campaign for a probe into the competitiveness of the UK energy market highlights the fact the many families and small businesses are overpaying for their bills – in some cases by a very significant amount.

'The fear is that the consumer is bearing the brunt of ever-increasing prices and the lack of competition in the market means that there has been no effective way of keeping a lid on soaring costs.

'As it stands, a household could quite feasibly save £350 a year on energy bills just by switching provider. This might mean several months worth of Council Tax, a city break or even a new TV or washing machine.'

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'Energy market is broken': Just one in five of us trust gas and electricity firms